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Cerberus to buy Chrysler majority Cerberus to buy Chrysler majority
(10 minutes later)
US private equity firm Cerberus Capital Management is to buy a majority stake in car firm DaimlerChrysler's ailing US Chrysler arm.US private equity firm Cerberus Capital Management is to buy a majority stake in car firm DaimlerChrysler's ailing US Chrysler arm.
The group is to buy 80.1% of the firm for 5.5bn euros ($7.41bn; £3.7bn) DaimlerChrysler announced on Monday.The group is to buy 80.1% of the firm for 5.5bn euros ($7.41bn; £3.7bn) DaimlerChrysler announced on Monday.
News of the deal drove DaimlerChrysler shares 7% higher on the German market.News of the deal drove DaimlerChrysler shares 7% higher on the German market.
Under the deal - which will see the German-American firm retain a 19.9% stake - Chrysler will have to meet pension and healthcare costs.Under the deal - which will see the German-American firm retain a 19.9% stake - Chrysler will have to meet pension and healthcare costs.
'Right conditions''Right conditions'
The deal was sealed after two months of talks between an array of potential bidders interested in buying the US operation.The deal was sealed after two months of talks between an array of potential bidders interested in buying the US operation.
We have created the right conditions for a new start for Chrysler and Daimler Dieter Zetsche, chief executive DaimlerChryslerWe have created the right conditions for a new start for Chrysler and Daimler Dieter Zetsche, chief executive DaimlerChrysler
The future of Chrysler has been in the balance recently as it battled against huge losses that hit $1.5bn last year.The future of Chrysler has been in the balance recently as it battled against huge losses that hit $1.5bn last year.
"With this transaction, we have created the right conditions for a new start for Chrysler and Daimler," said DaimlerChrysler chairman and chief executive Dieter Zetsche."With this transaction, we have created the right conditions for a new start for Chrysler and Daimler," said DaimlerChrysler chairman and chief executive Dieter Zetsche.
The acquisition comes nearly a decade after the $36bn merger of Chrysler and the former DaimlerBenz AG.The acquisition comes nearly a decade after the $36bn merger of Chrysler and the former DaimlerBenz AG.
Along with other US car firms, Chrysler has suffered from falling profits and increased competition from Japanese car firms - slumping to fourth place in the US light vehicle market behind Toyota.Along with other US car firms, Chrysler has suffered from falling profits and increased competition from Japanese car firms - slumping to fourth place in the US light vehicle market behind Toyota.
Like its US peers, the group has also embarked on a significant reorganisation plan, which includes 13,000 job cuts.Like its US peers, the group has also embarked on a significant reorganisation plan, which includes 13,000 job cuts.
Tom LaSorda, president and chief executive of Chrysler Group said the transaction would create a "standalone Chrysler that is financially stronger".Tom LaSorda, president and chief executive of Chrysler Group said the transaction would create a "standalone Chrysler that is financially stronger".
Worker worriesWorker worries
Unions - who had been worried over job implications of any sale - welcomed the deal.Unions - who had been worried over job implications of any sale - welcomed the deal.
Ron Gettelfinger, president of the United Autoworkers, said: "The transaction with Cerberus is in the best interests of our UAW members, the Chrysler Group and Daimler."Ron Gettelfinger, president of the United Autoworkers, said: "The transaction with Cerberus is in the best interests of our UAW members, the Chrysler Group and Daimler."
The UAW has a four-year contract with Chrysler that comes to and end in September.The UAW has a four-year contract with Chrysler that comes to and end in September.
The transaction with Cerberus is in the best interests of our UAW members, the Chrysler Group and Daimler Ron Gettelfinger, president, United AutoworkersThe transaction with Cerberus is in the best interests of our UAW members, the Chrysler Group and Daimler Ron Gettelfinger, president, United Autoworkers
Analysts have said that making the firm profitable will demand that any new contract with the UAW includes lower costs, notably in health care.Analysts have said that making the firm profitable will demand that any new contract with the UAW includes lower costs, notably in health care.
Experts also said the deal illustrates the continued interest of Cerberus in the auto industry.Experts also said the deal illustrates the continued interest of Cerberus in the auto industry.
In 2006, GM offloaded a majority share in its finance arm, General Motors Acceptance (GMAC) , for some $14bn to a group that was headed by Cerberus. In 2006, GM offloaded a majority share in its finance arm, General Motors Acceptance (GMAC), for some $14bn to a group that was headed by Cerberus. Analysts believe the private equity firm might be considering merging the GMAC outfit with Chrysler Financial.
Analysts believe the private equity firm might be considering merging the GMAC outfit with Chrysler Financial.